Communicators

Acquisition of Red October Gold Project

Highlights

-          Matsa to acquire 100% of the high grade Red October Gold Mine and Project area from Saracen Mineral Holdings Limited. The mine has had historical production of 342,000oz gold at an average of 6.1g/t.      

-          The acquisition includes:

• 64km2 of granted mining tenements contiguous to Matsa’s Lake Carey project where recent highly anomalous gold targets have been identified
• Project includes Treasure Island and several other high quality gold targets
• A JORC compliant gold resource of 99,000 ounces which results in an increase in Matsa’s gold resource to 453,000 ounces
• All mining and exploration information relating to the mine
• A modern 68 person camp with full accommodation and administration facilities setup up for the Red October mine, which is easily upgradable to 128 persons
• All supporting mine infrastructure and haul roads

-          Matsa to immediately assess the potential to recommence mining at Red October and to determine the ability to increase gold resources via further exploration and drilling

-          Significant opportunity for Matsa to achieve reduced operational expenditure and mining efficiencies at its Fortitude trial mine by utilising the Red October camp and facilities

-          The acquisition significantly and strategically increases Matsa’s footprint in the Lake Carey area and provides additional production opportunities

Here the Link to the original ASX-Announcement: http://www.asx.com.au/asxpdf/20170926/pdf/43mmvyrtll2njm.pdf

Matsa Resources Limited (“Matsa” or “the Company” ASX: MAT) is pleased to advise that it has entered into an Asset Sale and Purchase Agreement (“ASPA”) with Saracen Mineral Holdings Limited (“Saracen”; ASX: SAR) to acquire the Red October Gold Project from Saracen for a combination of cash and shares to the deemed value of $2 million.

The Red October Gold Project is located immediately adjacent and contiguous with Matsa’s Lake Carey Project, containing the Fortitude mining operation (Figure 1). The project areas covers 64 km2 and consists of nine MLs, an extensive well maintained underground mine with associated 68 person camp, offices, wet and dry messes, power, mining equipment and a Mineral Resource Estimate of 99,000 oz of gold (refer Table 1). The camp was formerly 128 person camp, and as such remains easily upgradeable to its former capacity.

Figure 1: Red October Location Map and gold targets

Strategically, the Red October acquisition is an excellent geographical fit with Matsa’s Lake Carey gold project, which will now give a combined project area totalling 509 sq. km.

Matsa intends to immediately investigate the mining potential of Red October with a view to recommence mining as soon as practicable, as well as drill a number of targets to increase the life of a potential mining operation. Matsa believes the potential to do so is excellent.

Matsa will also immediately utilise the Red October facilities to reduce operational expenses at Fortitude.

Matsa’s Executive Chairman Mr Paul Poli said “The acquisition of Red October represents an outstanding value opportunity for Matsa to increase both its footprint in the high quality Lake Carey project area and expand our production ability beyond the Fortitude trial mine currently in production. In addition, there are a number of exploration targets that we believe will yield strong results in due course.”

Mr Poli added “Not only has Matsa acquired an excellent production opportunity but the use of the Red October camp and facilities will allow us to reduce our operating expenses and be considerably more efficient at the Fortitude gold mine. This is particularly relevant as it may assist the Fortitude gold mine to be expanded beyond the trial stage. Furthermore, the fact that Saracen were keen to acquire a strategic shareholding in Matsa is a vote of confidence in our future plans. An added benefit is the Saracen shareholding provides quality exposure to the astute shareholders of Saracen themselves.”

The consideration for the acquisition of the Red October Gold Project is:

1. A deposit of $150,000 in cash at the time of execution of the ASPA (paid);
2. At completion Matsa will issue 4,545,000 fully paid ordinary shares to Saracen at a deemed value of $0.22 each
3. 90 days after completion Matsa will pay Saracen a deferred cash consideration of $850,000; and
4. Adoption of all rehabilitation of the existing mine area.

The conditions precedent are those that are typical for an agreement of this nature. Should completion not occur due to a breach of the agreement by either party then a break fee of $150,000 will be payable by the party who caused the breach to the other party.

Red October Geological Summary

The Red October mine is a structurally controlled gold deposit located in the Laverton Greenstone Belt (LGB) which hosts >25Moz of gold and includes Sunrise Dam, Granny Smith, Wallaby, Lancefield, Chatterbox and Matsa’s Fortitude Mine (Figure 1).

Currently in care and maintenance, the Red October mine has produced a total of 1.7Mt at 6.1g/t for 342koz Au. The Open Pit operation contributed 113koz Au at 6.5g/t Au between 1999 and 2002 and the underground operation has produced 1.2Mt at 5.9g/t for 229koz Au to a depth of 550m vertical metres from 2012 to 2017. As at 30 June 2017, the Red October Mineral Resource estimate stands at 99,000 ounces of gold (Table 1).

Table 1: 30 June 2017 Red October Resource Estimate (ref ASX: SAR 02/08/2017)

The Red October deposit lies 1.5km east of a granitic body, beneath the Lake Carey lake system and is hosted by a northeast trending mafic and ultramafic volcanic package that dips steeply to the northwest. The basal rocks consist of pillowed basalt with overlying ultramafic/high MgO basalt flows and a thin graphitic shale at the contact between the two lithologies.

Mineralisation at Red October occurs over 900m along strike and to a depth of at least 700m. Two structurally controlled gold mineralisation styles have been identified at the mine; shear zone mineralisation, and stockwork veining and brecciation style mineralisation.

Shear zone hosted mineralisation is hosted within quartz-carbonate shear veins and wall rock alteration. It is dominant in the top 300m at Red October and comprises the northeast trending Red October Shear Zone (ROSZ), the recently (2016) discovered Lionfish Lodes running sub-parallel to the ROSZ in the hanging wall ultramafics and the north trending Anchor and Smurf type lodes. The intersections of the north trending shear zones with the northeast trending lodes are typified by more intense alteration and high grade gold (Figure 2). 

The black shale unit at the contact of basalt and higher MgO units is referred to as the ROSZ. Within the ROSZ, intense biotite alteration is associated with mineralisation while the Anchor and Smurf structures contain a more sericitic alteration. Gold occurs as irregular grains interstitial to quartz-calcite vein infill and in equilibrium with pyrite and arsenopyrite. Hydrothermal alteration associated with the ROSZ and the associated shear veins shows a zonation outward from the ROSZ. Proximal alteration comprises muscovite-calcite-quartz-pyrite and extends up to 1m away from the ROSZ. The proximal alteration passes to a biotite-quartz-chlorite-calcite-pyrite alteration that extends up to 2m beyond the proximal alteration zone. The distal alteration extends up to 30m away from the ROSZ and consists of chlorite-calcite-pyrite. Hydrothermal alteration in all zones consistently overprints the metamorphic mineralogy.

Figure 2: Long section of Red October looking NNW (mine grid West) showing the main structural elements.

The Anchor shear zones are semi-regularly spaced at 25 to 40 metres apart in the footwall and hanging wall. The intensity of deformation and associated vein abundance/alteration in the Anchor shear zones is variable. The moderately east dipping Smurf shear zones are only developed in the footwall basalt succession and are typically strongly sericite-carbonate-pyrite altered with quartz-carbonate shear veins and medium grade gold mineralisation.

At approximately 300m below surface, ROSZ shear zone mineralisation transitions to a narrow (<2m) zone termed the Marlin lode that comprises stockwork veining and brecciation within the footwall pillow basalts.  The preservation of early epidote-quartz-calcite sea-floor alteration of pillow basalts within or adjacent to the Marlin lode is interpreted to have been a fundamental control on the localisation of shearing, tensile failure with veining and brecciation that led to high grade gold mineralisation. The Marlin contains similar gold blowouts associated with the Anchor and Smurf structures as the ROSZ (Figure 3). The breccia has a jigsaw texture with clasts of fragmented wall rock ranging from a few mm to 0.5 m in size. The breccia infill is coarse-grained anhedral quartz with fine-grained calcite and interstitial pyrite ± arsenopyrite. The tenor of gold mineralisation within the Marlin decrease below around 600m below surface. Coincident with the reduction in the width of the Marlin and contained gold grades is a moderately south to southeast dipping lamprophyre dyke. It is unclear if there is a genetic link between reduced gold grades and the lamprophyre given the latter post-dates mineralisation.

Figure 3: Gold from Marlin Lode 1220S stope

Forward Work Strategy

The Red October mine was recently (June 2017) placed in care and maintenance and the mine remains in good, dry condition. A number of areas are available for immediate mining however the business case of exploiting these areas is yet to be determined and a review is underway. Exploration for additional ounces, both within and near the mine as well as over the tenement package is planned in order to increase potential mine life longevity.

The potential for extensions of known lodes and discovery of new lodes is considered excellent as evidenced by the recent discovery of the Lionfish lodes.

Figure 4: Long Section looking Mine Grid W showing intercepts greater than 15 g/t Au with values greater than an ounce annotated with gold grade (g/t).

Here the Link to the ASX-Announcement: http://www.asx.com.au/asxpdf/20170926/pdf/43mmvyrtll2njm.pdf

For further information please contact:

Paul Poli      

Executive Chairman   

Phone  +61 8 9230 3555

Fax  +61 8 9227 0370

Email  reception@matsa.com.au

Web  www.matsa.com.au

CORPORATE SUMMARY

Executive Chairman

Paul Poli

Director

Frank Sibbel

Director & Company Secretary

Andrew Chapman

Shares on Issue

144.7 million

Unlisted Options

16.98 million @ $0.25 - $0.30

Top 20 shareholders

Hold 54.615%

Share Price on 22nd September 2017

18.5 cents

Market Capitalisation

$26.77 million

Competent Persons Statement

The information in the report to which this statement is attached that relates to Exploration Results and Mineral Resources related to Gold is based upon information compiled by Mr Daniel Howe, a Competent Person who is a member of the Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Daniel Howe is a full-time employee of Saracen Resources. Daniel Howe has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and the activity being undertaken to qualify as a Competent Person as defined in the 2102 Edition of the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Daniel Howe consents to the inclusion in the report of matters based on his information in the form and context in which it appears.